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Debt gulps 8 percent of East Africa revenues

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East African countries are now spending almost eight per cent of their revenues to service $29.42 billion loans borrowed in the past 10 years.



They borrowed the money largely from China to grow their transport, communication, manufacturing and energy sectors.

Analysts said the loans are becoming a burden, especially given that their impact is yet to be seen on the growth.

The latest data from the China-Africa Research Initiative (Cari) at John Hopkins University shows that Ethiopia owes Beijing $13.73 billion, followed by Kenya at $9.8 billion. Uganda owes $2.96 billion and Tanzania $2.34 billion.

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Rwanda, South Sudan and Burundi owe China the least amounts — $289 million, $182 million and $99 million respectively.

Cari director Deborah Brautigam said that the risk for the African borrowers relates to the projects’ profitability.

“It is always important to look at whether these projects will generate enough economic activity to repay these loans, as opposed to being seen as merely ribbon-cutting opportunities,” Ms Brautigam said.

The bulk of the monies, according to research by The EastAfrican, went into the transport sector, followed by power, communications and manufacturing.

Ethiopia’s biggest intake of the Beijing loans was in 2013, coinciding with the launch of its joint standard gauge railway project with Djibouti.

Addis took up more than $6.62 billion from Beijing for its mega projects, which also included the setting up of manufacturing zones.

The data also shows Kenya’s new railways line accounted for the highest debt intake from Beijing at $3.7 billion in 2014.

China Exim Bank has been the go-to financier for the region’s governments, giving out more than $16.3 billion.

The China Development Bank advanced East African economies more than $6.9 billion, while other Chinese lenders are currently owed $6.1 billion, data shows.

In terms of sector funding, Ethiopia invested the bulk of its funds in the transport sector ($4.37 billion), which was used for both the Addis Ababa light railway project and the Addis-Djibouti 700km railway.

This was followed by communications at $3.16 billion and power projects at $2.54 billion.

Its manufacturing sector, which supports its fledging special industrial zones, including the Eastern Industry Zone and Huajian International Shoe City, received $2.02 billion.

“China gave priority to infrastructure and has promoted Africa’s sustainable development through these loans, which have been used for infrastructure construction, energy and the manufacturing industry,” said Liu Qinghai, a visiting researcher at Cari and head of the Center for African Economic Studies at the Institute of African Studies at Zhejiang Normal University.

Kenya’s transport sector took in $5.55 billion, largely driven by the new railway line from Mombasa to Naivasha.

Nairobi also took a $597 million loan for its power projects, including the $135 million for the 55 MW solar power plant in Garissa funded by the China Exim Bank.

South Sudan has received $158 million for its transport sector to date, and a further $24 million for its energy projects.

Tanzania’s energy sector remains the top financed sector funded by Chinese money, at $1.16 billion.

Dar es Salaam, which has not taken up any Chinese debt under President John Magufuli, has received $552 million for its communications sector.

Uganda, on the other hand, has seen its energy sector receive the highest funding from Beijing, at $1.92 billion, while its transport sector has absorbed $762 million.

Rwanda’s China debt for transport amounts to $151 million.

But the region’s countries seem to have slowed down bingeing on Chinese debt, with only Kenya and Ethiopia going to Beijing for loans.

Ethiopia borrowed $652 million last year, down from $926 million in 2016, while Kenya took $64 million, down from $1.09billion in 2016.

In 2016, Kigali took $70 million and Kampala $85 million.

Last month, Ethiopia became the first country to get its Chinese debt rolled over announcing that Beijing had agreed to restructure its $4 billion loan on the railway linking its capital Addis with neighbouring Djibouti.

Ethiopia’s Prime Minister Abiy Ahmed said that the country’s loans will now receive a further 20-year extension, which will see its annual repayments narrow to an affordable level.

“In conversations with our Chinese partners, we had the opportunity to enact limited restructuring of some of our loans.

“In particular, the loan for the Addis Ababa-Djibouti railway, which was meant to be paid over 10 years, has now been extended to 30 years. Its maturity period has also been extended,” Dr Abiy said.

Kenya also sought to get a grant as part of the package for its $3.8 billion loan for its continuing railway projects, as it seeks to manage its debt burden.

“The Naivasha-Kisumu phase of the SGR will cost $3.8 billion. And owing to its regional significance, I would request that 50 per cent of its cost be provided as part of grant financing,” President Uhuru Kenyatta said at the Forum on China-Africa Co-operation in Beijing in August. This request was not granted.

Tim Jones, an economist at the Jubilee Debt Campaign, said that the continent debt problem could worsen, especially given the opaque nature in which they are signed.

“Debt problems are worsening and many lenders bear responsibility, not just China. We need new rules to make all lenders publicly disclose loans to governments at the time they are given. We also need to see these lenders made to restructure and reduce debts,” Mr Jones said.

Last month, China’ s special envoy to Africa, Xu Jinghu, denied claims that Beijing was burdening Africa with debt, noting that China was Africa’s main creditor.

Indeed, data shows that the continent owes more to private lenders than to China.

“It is baseless to shift the blame onto China for these African countries debt problems. Their debt position has ‘been built over time even before we came in.

“We have to look at the fluctuations in the international economic situation vis-a-vis the price of minerals, their key exports. This is where the problem is, and not Chinese loans,” Mr Xu said.

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Motherland News

Lagos-Ibadan expressway partially closed till Friday.

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The Federal Road Safety Corps (FRSC) Ogun State Command, has announced the temporary closure of a section of the Lagos-Ibadan Expressway, from Wednesday, May 22 till Friday, May 24.

FRSC, in a statement made available to the public explained that the temporary closure will affect only the Ibadan-bound carriageway of the expressway from Magboro to Kara and Ibafo.The statement added that the three-day closure is to enable Julius Berger lay asphalt on the road.

“This is to inform the motoring public that Julius Berger Nigeria PLC, currently rehabilitating the Lagos–Ibadan Expressway, would be temporarily closing only the Ibadan bound carriageway from Magboro to Kara and Ibafo, scheduled to commence from Wednesday, 22 May, 2019 and reopened on Friday, 24 May, 2019.”

“The closure would not affect traffic inbound Lagos around the affected road, but would narrow the carriageway which is expected to build up traffic around the mentioned sections,” the statement read in part.

The FRSC Sector Commander, Clement Oladele, therefore advised motorists to note the development and plan their trips.

Oladele warned those using the corridor within the period to obey all traffic rules and regulations, including refraining from driving against traffic, as violators are liable to be apprehended for dangerous driving which attracts the fine of fifty thousand naira (N50,000) and impoundment of the erring vehicle.

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Motherland News

Nigeria: Another Teenager drowns in Kano

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Kano State Fire Service spokesman, Alhaji Saidu Mohammed announced that Umar Murtala drowned in a pond at Gwazaye, in Gwale LGA of  Kano State.

According to reports, there has been increased  cases of drowning since the commencement of the heat season in Kano about a month ago.

Alhaji Mohammed disclosed to newsmen in Kano that Murtala, 18, drowned in a pond at Gwazaye, opposite the  Abacha Youth Centre around  5:00p.m on Sunday.

“On receiving the information, we sent our rescue team to the scene at  5:15p.m.

“The cause of the incident is still under investigation.

“Murtala was found dead and his corpse was later handed over to his father, Alhaji Murtala Salisu.’’ 

In another development, it was also reported that one Mr Mohammed Shaharali, 20, drowned when he fell into an open pool of water on Sunday morning at Ladanai in Nasarawa LGA of Kano State.

According to him, the deceased was rescued unconscious but later confirmed dead.

The spokesman said that his remains were handed to the Head of Hotoron Arewa  Central Ward, Alhaji Murtala Mohammed.


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